Good entrepreneurs recognise the existence of competitors and will analyse the strengths and weaknesses of others in their industry to better formulate their own business strategy and service offering.
In identifying competitors, a small business owner will:
- Know and learn who they are competing against
- Be able to target customers
- Get ideas on what works and what doesn’t
- Proactively maximise competitive advantage
Once competitors have been identified, it’s beneficial to design a plan to define what a space in the market your business operates in and what customer need it solves.
How do you identify the competition?
There are several ways to research the competition. Google searches, and listening to customers, suppliers and vendors. This group can provide relevant information and maybe even the inside scoop about each of your competitor’s business dynamics, marketing strategies and development plans.
Types of competition
Competition can either be direct or indirect. Your small business’s overall potential for success will be affected by the intensity of this competition.
Similar products and services offered by multiple businesses create direct competition. For example, Hungry Jack’s and McDonald’s are direct competitors.
Businesses providing slightly different products and services but target the same market or group of customers with the same set of needs becomes indirect competition. For example, a consumer who wants to buy a computer has different products to choose from such as laptops, desktops, notebooks, etc.
Other than slightly different product and service offerings, branding and packaging can create indirect competitors with different prices targeting the same market or group of customers.
Though not necessarily offering the same products or services, replacement/perceived competitors fight for the same resources or market base. Doing market and/or audience research and using social listening applications and tools may also help you identify competitors.
Keyword competitors are online-based business competitors that prefer achieving high online search rankings instead of fighting for a market share of the target market. Proactively compete by obtaining maximum competitive advantage through using search engine oriented keywords.
Note your business’ top five competitors and consider the major threats that they pose to the business. Doing a threat assessment is important to design and implement a business strategy to tackling the competition to afford the business with the maximum competitive advantage possible.